California ISO proposes changes to flexible capacity framework

The California Independent System Operator plans to develop three flexible capacity products to help the grid operator manage a growing renewable energy fleet, according to a draft 'framework' released Monday.

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The ISO's current flexible capacity product is overly inclusive and could make the grid operator's operational challenges worse by supporting largely inflexible resources at the expense and financial viability of more flexible resources, according to the framework.

The ISO started addressing its flexibility needs three years ago when it launched its flexible resource adequacy criteria must offer obligation, or FRAC-MOO, which is used to help handle overgeneration and the steep ramps that are becoming more frequent as solar generation is added in California.

The FRAC-MOO parallels a California Public Utilities Commission requirement that load-serving entities acquire flexible capacity as part of their resource adequacy obligations.

A year ago, the ISO issued a white paper that kicked off the start of a possible change to its FRAC-MOO framework, which was seen as an initial step in addressing the state's rapidly changing grid.

New flexibility products are needed to meet both generally predictable ramping needs as well as real-time uncertainty, according to the framework.

There can be unpredictable changes between the day-ahead and real-time market of up to 4,000 MW in either direction, with swings of more than 6,000 MW in a day, the ISO said.

"The ISO requires flexible [resource adequacy] products that include eligibility criteria focused on the ramping speed and dispatch capabilities to address these needs," the framework said.

In response, the ISO said it is proposing to develop three types of flexible resource adequacy products: a five-minute, a 15-minute and a day-ahead shaping product. The ISO intends to work with stakeholders to determine the final eligibility criteria for the products and must-offer obligations.

The framework will include improved opportunities for imports and variable energy resources to provide flexible resource adequacy capacity, the ISO said.

The framework does not address how the flexible capacity requirements will be allocated among load-serving entities. The ISO said it is seeking stakeholder feedback on equitable allocation methods, which the ISO will take up in the next iteration of the framework.

ISO staff will discuss the draft flexible capacity framework proposal with stakeholders at a November 29 meeting. ISO board action on a final proposal is possible in 2018.

ISO EYES ADDITIONAL MARKET CHANGES

Given the need to create a more interconnected market, the ISO said it is considering additional market changes to enhance reliability, improve system control and address real-time supply and demand uncertainty.

The ISO, for example, intends to develop a 15-minute "integrated forward market," or IFM. "This product will make IFM schedules more granular and allow the ISO to better shape dispatches, reducing the amount of load following required between" the IFM and 15-minute market, the grid operator said.

Also, the ISO said it plans to put in place a day-ahead load following reserve product. "This product is similar to the existing real-time flexible ramping product; however, it is designed to ensure there is sufficient load following capabilities (both up and down) reserved between day-ahead and real-time markets,' the grid operator said.

The ISO is exploring ways to better ensure resources follow their dispatch operating target, or DOT. ISO operators already manage a significant amount of uncertainty in real-time. Resources not following their DOT adds to real-time uncertainty, according to the ISO. "Therefore, the ISO will explore policy changes that set clearer standards and requirements for resources to follow their DOT, with potential performance charges for failure to do so," the grid operator said.

The ISO said it is investigating the cause of recent intertie declines and is considering possible market changes to mitigate the issue. In a review of several days when the ISO system became capacity constrained, the grid operator found instances when significant quantities of imported energy committed in the forward market did not show up in real time.